Overseas Chinese Equities, Aequitas Research

Ming Lu

A veteran with 19-year experience in equity research.

Geographical coverage:
* Companies operating in China, but listed in Hong Kong and the U.S.
* Previously China A-share (listed in mainland China).

Equity sector coverage:
* Chinese App / Internet-based consumption in China, e.g., Alibaba, Tencent, etc.
* Previously covered education, transportation, telecom, power, bank, advertisement, hotel, etc.

Research methods:
* Generally bottom-up.
* Talk to related people on the ground.  Talk to readers and independent writers for analyzing a news portal.  Talk to parents and teachers for analyzing a tutoring school. 
* Visit stores and show photos as evidence in notes.
* Do technical analysis when finding a short-seller attacking an equity.

Languages:
* English
* Mandarin Chinese (Official language of China)
* Shanghainese (Language of Shanghai, the most developed city in China)
* Cantonese (Language of Hong Kong and Canton Province, one of the most developed provinces in China)

Overseas Chinese Equities

Alibaba IPO/Secondary Listing - Proposed Stock Connect Changes Might Throw a Spanner in the Works

ECM Weekly (24 Aug 2019) - Alibaba, Smoore, Venus Medtech, Henlius Bio, Changsha Broad Homes

ECM Weekly (31 Aug 2019) -  Megvii, Pharmaron, China Feihe, Home Credit, Prosus

Alibaba (BABA): A Visit to New Business Hema-Mini – Successful Change

Alibaba (BABA): A Visit to Hema Bazaar – Has Found Key Problem, But Not Thorough Solution

Alibaba (BABA): A Visit to Hema’s New Business “Pick’n Go” – A Careless Variation

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>BABA’s operating profits of RMB 24 billion in 1Q20 (ended June 2019) was three times of RMB8 billion in 1Q19.</li>
<li>The operating margin improved to 21% in 1Q20 versus 10% in 1Q19.</li>
<li>The operating margin of core commerce improved slightly by 2 percentage points.</li>
<li>BABA effectively cut losses in all minor businesses.</li>
<li>We believe the operating margin will improve to 19% in 2020 (ended March 2020) versus 15% in 2019.</li>
<li>The P/E band from IPO to date suggests an upside of 48% and a target price of USD240.</li>
</ul>


BABA’s operating profits of RMB 24 billion in 1Q20 (ended June 2019) was three times of RMB8 billion in 1Q19.
The operating margin improved to 21% in 1Q20 versus 10% in 1Q19.
The operating margin of core commerce improved slightly by 2 percentage points.
BABA effectively cut losses in all minor businesses.
We believe the operating margin will improve to 19% in 2020 (ended March 2020) versus 15% in 2019.
The P/E band from IPO to date suggests an upside of 48% and a target price of USD240.


Alibaba (BABA): Tripled Operating Profits in 1Q20, 48% Upside